Saturday, August 23, 2008

Thoughts about managing money well

Investing well is not all that hard to do or to measure.  All you need to do is earn a relatively high rate of return.  A good investment for you, is almost certainly a good investment for anyone else.

However, managing your money well is much more difficult goal to achieve and to measure.  Money is a tool that can help you achieve your goals, realize your values, and live the life that you want to live.  A good decision on what to do with your money might be a lousy decision for someone with different goals.  Therefore, in order to manage your money well, you need to know what your goals and dreams are, so that you can use your money to live the life that you want to live.

As you look over how you spend (and save) your money think about whether your spending patterns are helping you live the life that you want to live.  Are your choices with your money moving you closer to achieving your goals?  If not, why not?

One exercise that can help you figure out your values and goals is to think of your past accomplishments.

A few of the things that I am most proud of about my own life:

1. I have a strong marriage to a wonderful woman.
2. I am raising an absolutely incredible little girl.
3. I learned how to speak Chinese.
4. I ran the Great Wall Marathon.
5. I am successful in a difficult and competitive career.
6. I have traveled extensively and seen many parts of the world.

Think about what you have done in your life that make you the most proud.  Did your spending habits, either directly or indirectly, have any affect on your accomplishments?  Did they help you, hinder you, or neither as you accomplished these things?  What are the best decisions that you have made with your money?  Why is it that you think of these decisions as being so right for you?  I will talk more about how to manage your money according to your values and goals in a post in the next few days, but for now think over these questions.

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